Frodo organized Bilbo's manuscript and used it to write down his own quest during the War of the Ring. Inscribed within, it reads:

My Diary. My Unexpected Journey.There and Back Again.And What Happened After.Adventures of Five Hobbits.The Tale of the Great Ring,compiled by Bilbo Baggins from his own observations and the accounts of his friends.What we did in the War of the Ring.

THE DOWNFALLOF THELORD OF THE RINGSAND THERETURN OF THE KING(as seen by the Little People; being the memoirs of Bilbo and Frodo of the Shire,supplemented by the accounts of their friends and the learning of the Wise.)Together with extracts from Books of Lore translated by Bilbo in Rivendell.

The original book was kept in a red case (with a three-volume Elvish Translation and a fifth volume [genealogical tables and commentaries]). Several copies, with various notes and later additions, were made and copies were passed on to future generations, of which one, the "Thain's Book", is the most important.

The "original" version of the Red Book contained the story of Bilbo's journey as it originally stood: thus, Gollum willingly gives the One Ring to Bilbo, and there is no trace of the Ring's hold over Gollum. Later copies of the Red Book contained, as an alternative, also the true account (later written in by Frodo), where Bilbo comes across the Ring by accident.

Inspiration

"But most of all he [Tolkien] found delight in the Fairy Books of Andrew Lang, especially the Red Fairy Book, for tucked away in its closing pages was the best story he had ever read. This was the tale of Sigurd who slew the dragon Fafnir: a strange and powerful tale set in the nameless North."

Tolkien's inspiration for this repository of lore was the real Red Book of Hergest, the early 15th century compilation of Welsh history and poetry that contains the manuscript of the Mabinogion. Bound (and rebound) in red leather, in the Bodleian Library, Oxford, the manuscript was well known to Tolkien.

In the first edition of The Fellowship of the Ring, Tolkien's foreword claimed he had translated the Red Book from the original Westron into English, and it therefore must be supposed that copies of the book survived throughout several Ages.